REITs To Sell Before A Real Estate Bubble

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When the coronavirus began to shut the economy down in March, shares of real estate investment trusts (REITs) got hammered.

The shares of many REITs have since recovered, along with the broader stock market. Many have called this buy-up a "real estate bubble."

Truth be told, that's probably not the case right now. But it never hurts to be ready. There are certainly a few REITs to sell now whether or not a real estate crash is in view.

This year, we saw offices empty, and many retail businesses were shuttered. It was questionable if rents would get paid, which could lead to a wave of commercial and residential real estate foreclosures.

Quick actions from the U.S. Federal Reserve and Congress prevented the worst from happening. Although some sectors such as shopping mall REITs have suffered, most sectors are seeing over 90% of rents getting paid right now.

Still, new strains of coronavirus popping up overseas could threaten these gains.

With COVID-19 spreading once again and the threats of lockdowns looming ahead, many investors are worried that we will see another massive sell-off in REIT shares.

Again, we do not necessarily think this will happen. Most REITs were in a good financial condition when this started and have managed through the crisis very well.

That doesn't mean it might not be smart to sell some REITs that look vulnerable to any additional economic weakness.

If we ever approach a real estate bubble, these REITs would be the first to drop…

Why Mall REITs Are the Best of the Worst

There is no question that Simon Property Group Inc. (NYSE: SPG) is the best mall REIT in the United States, if not the world right now. Simon has Class A malls in high-income areas with dense populations. It has done an excellent job of repurposing mall space over the past few years.

Simon has even gone so far as to buy some of its tenants failing like JC Penney, Brooks Brothers, and Lucky Brands. The hope is that they and their partner can resurrect the retailers and keep them from closing forever.

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Disclaimer: Any performance results described herein are not based on actual trading of securities but are instead based on a hypothetical trading account which entered and exited the suggested ...

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